Editors’ Weekly News Round Up March 4 – March 8
The futures of some institutionally owned San Francisco properties were subjects of interest to Connect CRE readers this past week. One story among the five most-read for the week ending March 9 concerned the long-term plans for a property on which ownership handed back the keys last year, while another reported that the current ownership may walk away.
Leading the ranking, though, was a story focused on the broader commercial real estate market. Based on CBRE’s latest cap rate survey, Cap Rates May Be Nearing Their Peakreported that stabilizing conditions are on the horizon in spite of near-term challenges.
The story, which closed out the week, linked rising bond yields to cap rate expansion. Those yields may soon peak, though, and there’s also the expectation that the Federal Reserve will begin reversing course on the federal funds rate later this year.
Coming in second was a story that resonated with readers in California and nationally. New York City-based Paramount Group has written down to zero its investment in two San Francisco office properties, 111 Sutter St. and the two-building Market Center. The headline Paramount May Give Back San Francisco Office Towerssummed up one of the options being considered by the REIT, which led partnerships that paid a combined $949 million for the properties five years ago.
2023 saw Brookfield and Unibail Rodamco Westfield turn over the Westfield San Francisco Centre to lenders, citing “the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy and foot traffic.” Roughly six months later, the retail center—which has existed in one form or another since 1896—is under the stewardship of Trident Pacific Real Estate Group and JLL.
Former Westfield San Francisco Centre Poised for Revival provided a look at the priorities Trident Pacific and JLL have established in repositioning the property, which will be rebranded as Emporium Centre San Francisco. It was Connect CRE’s third most-read story for the week, and also drew strong readership from our national audience as well as our California readers.
Trepp reported the results of its latest LifeComps index covering the performance of commercial mortgages originated by life insurance companies, and the result was our fourth most-read story for the week. As readers learned in Life Companies See Big Jump in Returns on Commercial Mortgages, insurers saw a total return of 4.93% in the fourth quarter of 2023, marking the first time the return has gone above 4% since Q2 2020.
Completing the top five was a report on a new initiative from investment and development company Lightstone, headquartered in New York City. Lightstone Launches $500M Rescue Capital Platformreported that the company intends to deploy that capitalacross multifamily, industrial, and hospitality assets nationwide, representing a variety of positions within the capital stack.
On the subject of CRE finance, the latest edition of Weekender sums up our recent capital markets series with a look backward at 2023 and ahead to the year now unfolding. Although last year was a difficult one for capital markets, it also yielded positive results in terms of realistic borrower expectations and a rise in creative financing strategies, as you’ll read in the article.